Michael Covel: News & Info.

Jennfier Bayot of the New York Times writes in her article titled Older Investors Jittery as U.S. Markets Disappoint:

“…Jim Paulsen, chief investment officer at Wells Capital Management in Minneapolis, said he had encountered many investors who were staying on the sidelines because of terrorism fears. “This year still seems to be more about fear than reality,” Mr. Paulsen said. “We’ve had remarkable recovery on many fronts, restoration of profits, re-emergence of jobs, the continuation of low inflation rates and interest rates. But whenever I speak to investors about the economy and the markets, the first question I get is ‘What about a terrorist attack?’ It’s hard to convince people no matter how good the fundamental story is that they should up their equity levels. There’s this ghost out there and no amount of G.D.P. growth can overcome it.”…Karen Orlin, 56, a corporate lawyer in Boca Raton, Fla., said she had already changed her buying habits and retirement plans because of the stock market’s recent fizzle…”I am much more conservative in my expenditures,” Ms. Orlin said. “I’m not as much of a consumer as I was five years ago.”…As far as her investments are concerned, she said she was less concerned with growing her portfolio of mutual funds than she was with simply maintaining its current value, which she declined to give…Mary Pitts, 70, a retiree in Boynton Beach, Fla., who worked for AT&T, had long planned to give her grandchildren the roughly 500 shares she had amassed in various cable and telecommunications concerns over the years. “I just figured I’d put it away and never touch it,” Ms. Pitts said. “I thought my grandkids could have it in 20 years or so.” But even with her long-term outlook, she has found the market’s recent performance unsettling. And so this month, Ms. Pitts sold all of her shares for $6,000, less than a quarter of the $25,000 that they were once worth…”I just held on too long,” Ms. Pitts said. “I had Lucent when it was up at $62 a share. I sold it at $3.”

It’s almost as if the writers out there take glee in reporting about people with bad trading strategies. They seem to enjoy the constant investor implosions, but they never lift a finger to attempt to fix it. The world’s great reporters just keep “reporting” the same ole story. Almost like a Seinfeld episode, their writing is about “nothing”.

“A most interesting book–definitely a ‘must have’ on your shelf. Pull out the plastic and get it!…Trend Following is well constructed, well written and an excellent distillation of the research undertaken by the author. Backed up by trading ‘legends’ like Ed Seykota, it convincingly argues that the most successful trading systems are based on trend following…While you may read the book in bed, especially the first time, it is best read at a desk with a notepad handy. While seeming to come from the perspective of technical analysis it is still a very good book on trading psychology…The book is both a great read and an insightful textbook for all traders and investors.”
Garnett Znidaric
Your Trading Edge Magazine
http://www.yte.com.au
Australia

NY Times writer Danny Hakim presents a great example of the folly of stock tips:

“Jonathan Mirin says he first heard about Wave Systems from a guy named Jerry. “This company’s selling for a dollar a share,” Jerry told him. “In a few years, it’ll be going for 500.” In those days - the late 1990’s - Mr. Mirin was a struggling New York actor in his late 20’s and a teacher in the public schools. The way he tells it, Jerry was a fellow teacher who told him over a cafeteria lunch one day that he had once been a big-time investor: “Limousines, jets, the whole thing.” Yes, he had lost everything in the crash of 1989, but now he was back in the game and had a hot tip to share. “I felt like I had received this tip, and I’d better make the most of it, because I don’t travel in circles where I get tips,” Mr. Mirin said…Mr. Mirin was not alone…Among the faithful was Joe Trippi, who later managed Howard Dean’s presidential campaign…”When it started going up, I figured, well, my theories are confirmed, and my friends would say, ‘You know, Jon, everyone’s a genius in an up boom cycle,’ ” he said. “I thought that for Wave to be doing this, someone must know something…”And then when it started going down, it was stubbornness: ‘I’m not going to admit that I’m wrong.’”…Founded in 1988, Wave has never reported a profit for even a single quarter, and it has lost more than $260 million. During the bubble, profit-free technology companies often won investors’ favor, but they generally could at least boast of substantial revenue. Not Wave. In its latest quarter, it reported revenue of $6,300.”

The Trend Following message is boring. It is not flashy. Trend Followers will never have fun and exciting stories to tell at cocktail parties. But isn’t that the issue: do you want to impress your buddies or do you want to trade for profit like the great traders of the last 30 years?